Duncan Jones' Blog

Over the last few weeks, several Forrester IT sourcing clients have asked us to review and comment on special proposals from SAP that offer an attractive discount and contractual flexibility in return for a large, irrevocable, multi-year commitment. It appears that several SAP sales teams are trying to achieve their annual targets by enticing customers to place firm purchase orders (PO's) now for products and users that they won't need until 2011 or later. This could be a great opportunity for buyers to take advantage of SAP's tough year and get an exceptional deal on software they were going to buy anyway. However, there are risks from over-committing ahead of your roll-out plans, as I explained a couple of years ago in my report, Avoid The Hidden Costs Of Shelfware, which is still as valid today as it was when I wrote it.

The most obvious risk is that delays in the implementation process will mean the licenses you're forced to buy in years 2 and 3 will sit on the shelf for a while until you are ready to deploy them. Worse, you'll be paying maintenance on that shelfware, which could soon cost you more than the extra discount you got on the initial deal.